By (Reuters) -Caterpillar said on Wednesday it expects full-year revenue to be slightly lower from its prior forecast as higher borrowing costs and sticky inflation led to a slowdown in machinery demand, sending the company’s shares down 5.3%.
The company has reaped benefits from U.S. President Joe Biden’s 2021 infrastructure law, a $1 trillion enactment aimed at upgrading roads, bridges and other transport infrastructure.
However, the initial boom in demand from government infrastructure projects has slowed down.
Concerns about persistent inflation and declining farm incomes have resulted in U.S. machinery makers moderating product stocking as dealers try to cut inventory levels, while rising manufacturing costs have also dented profits.
In August, Caterpillar (NYSE:CAT) said it expects 2024 revenue to be slightly lower than 2023. The company said on Wednesday it now expects annual revenue to be slightly lower than that.
The company, however, maintained its adjusted operating profit margin and adjusted profit per share expectations for the full year, as price hikes offset some impact from a sales slowdown.
The increase in dealer inventory was less during the third quarter compared to the previous year, Caterpillar said.
The company’s adjusted profit per share for the quarter decreased to $5.17 and missed average analyst estimate of $5.34 per share, according to data compiled by LSEG.
Total sales fell 4% to $16.11 billion, slightly beating expectations of $16.08 billion.